IDENTITY THEFT
Identity theft happens when a criminal obtains and uses someone’s personal information -- credit card numbers, bank account numbers, insurance information or Social Security number -- to buy goods or services fraudulently or without permission. Identity theft is unlawful and costs victims billions of dollars annually.
How to Protect Yourself
• Do not throw out credit card statements, bills, insurance papers, or bank statements where a criminal could retrieve them from the trash. Shred or destroy them first.
• Keep a list or photocopy of all your credit cards, account numbers, expiration dates, and telephone numbers of the customer service and fraud departments in a secure place, so that you can quickly notify your creditors if your cards are lost or stolen.
• Never reveal personal or financial information over the phone to anyone who calls to solicit a purchase or donation.
• Be wary if anyone calls you to “confirm” personal or financial information.
• Do not leave personal information lying around and do not lend identification cards to friends.
• Federal law entitles you one free credit report every year from each of the three agencies using the Web site www.annualcreditreport.com. Get a new report from a different agency every four months in order to track any improper uses of your credit that could indicate identity theft.
What to Do When You Become a Victim of Identity Theft
A victim of identity theft should immediately contact their local police or sheriff’s office and file a report.
After filing a report, enroll in the Identity Theft Verification Passport Program offered by the Ohio Attorney General. (It takes about 10 minutes.) The “Passport” program provides victims of identity theft a way to verify to law enforcement and creditors that their identities have been stolen. It enables victims to identify and correct fraudulent charges and repair any damages to their credit history. For more information on the Passport program, call the Ohio Attorney General’s office at (888) 694-3463 or visit www.ag.state.oh.us.
Take the following steps too.
1. Notify your bank and credit card companies and send them a copy of the police report.
2. Cancel your credit card accounts and your bank accounts, and open new accounts with new numbers.
3. Contact the three national credit bureaus to add a “fraud alert” to your credit file. The bureaus are:
• Experian – (888) 397-3742
• Equifax – (800) 525-6285
• TransUnion – (800) 680-7289
CONSUMER FRAUD
Common Consumer Frauds
Fake Checks – Consumers receive a phony check as a prize or for work or goods, and are asked to wire part of the money back to the recipients. Consumers do not realize the check is fake until after they have wired the funds.
Advance Fee Loans – Consumers have been asked to pay a fee in advance for a loan or credit card, only to learn the loan or credit card did not materialize.
Guaranteed Loans or Credit – These offers may be for home-equity loans that do not require equity in your home or for unsecured credit cards, without regard for your credit history. After paying the required fees, you will typically be turned down for the loan because you do not meet the “qualifications,” and the promised money never appears.
Credit Repair – Consumers are told they can pay a fee to have negative information removed from their credit reports or to establish a new credit record. This cannot be done and the schemes are illegal.
Vacation Prizes – Consumers pay a non-refundable fee for discount vacations (which do not materialize); or the accommodations are poor and the time you select is not available.
Health and Diet – Consumers are offered pills and herbal formulas at a substantial cost to control weight gain or cure hair loss. Be careful of advertisements that use vague phrases such as “miraculous cure,” “secret formula,” or “ancient ingredient.”
Chain Letter – Normally the consumer is asked to send a small amount of money to names listed on the letter. Often, the letter writer claims it is legal or approved by the government. Chain letters are almost always illegal and most people who participate lose their money.
Work-At-Home – The most common are envelope stuffing or craft assembly that require the consumer to pay a fee to get started. Those who respond usually receive no supplies. Instead, they simply get instructions on how to place the same advertisement.
Investment Opportunities – Consumers are promised outrageously high rates of return in an investment at no risk. The promoters of fraudulent investments often operate a particular scam for a short time, spend the money they solicit, and then close down before they can be detected. They often reopen, using another name, to sell another scam.
Buyers’ Club – A consumer is billed, usually on a credit card, for memberships that were not authorized by the owner of the card.
Phishing – Someone pretending to be an official from a bank or government agency asks a consumer to verify or confirm personal information for a fictitious reason. Some pose as an employee from a fraud department. Most often, legitimate inquiries of this nature will not ask for personal information.
Unfortunately, few frauds are actually reported because victims are embarrassed. Letting fraud go unreported allows the person committing the fraudulent acts or schemes to continue their illegal activities on the next person. So, if you are a victim of fraud, contact the local police department, the city or state consumer protection office, and the Federal Trade Commission. You may also wish to contact the National Fraud Information Center at (800) 876-7060 or by e-mail to www.fraud.org.
PREVENTING THEFT OF FUNDS IN ORGANIZATIONS
Follow the Money
Regularly examine your organization’s prior financial activity to see if revenues are on track. If not, find out why. If past records are in disarray, obtain the bank statements and check them to determine when money should be expected.
Be certain that purchases (expenses) are recorded, verified and approved by the group beforehand. Periodically audit the books with unannounced cash counts, inventories of equipment and examination of the underlying documents that show your accounts receivable and accounts payable. These measures can uncover phony purchases, unrecorded sales, and routine pilfering of property.
Keep an eye on the “unpaid” list, especially in fundraising sales. Always balance the accounts for your fundraising programs.
Warning Signs
• Bounced business checks could indicate funds being stolen from your account.
• Unexpected declines in profits or increases in expenses may be a sign that cash is being siphoned.
• Slow collections can be a device to mask embezzlement.
• Unusual write-offs of bad debts may cover up fraudulent financial schemes.
• Cash handlers who never take a vacation could be covering their tracks. Rotate duties occasionally and get another person to do the accounting for a short period. It is wise to get a better perspective on what is going on at each workstation, especially among employees who handle cash.
Establish Internal Controls
• Require checks to be countersigned by two responsible officials.
• Endorse all checks “for deposit only,” and note the specific account number.
• Do not keep cash lying around. Establish protocols that require regular bank deposits (daily or weekly).
• Entrust two people to count all cash and fundraising monies.
• The treasurer of the organization should verify all incoming money and provide receipts.
• Have a person other than the treasurer go through incoming mail.
• Delegate the responsibility for receiving checks and cash to someone other than the person who records the incoming funds.
• Make sure that volunteers who are responsible for ordering goods and supplies are not the same ones who are responsible for receiving or paying for them.
• If possible, do not give the authority to write off bad debts to the same person who has the authority to pay bills.
These steps may not be enough by themselves. Take an inventory of property and have bank accounts audited by an outside party annually. If possible, screen volunteers and have them submit to a security check before handling money. Some organizations protect themselves by bonding their members. Bonding is an insurance policy that covers an organization for losses of money or property that stem from dishonest acts of a "bonded" member. Finally, try not to become an organization that depends on one or two people to handle all financial activity.
Don’t take on more than the organization can handle in a safe, auditable manner. If embezzlement is suspected, take action immediately. A lack of internal controls can be very costly and ultimately ruin the reputation of an organization.